Shareholder letters: Pfizer
This week I’ll discuss only one letter – from Pfizer’s CEO Dr. Albert Bourla. The reason I decided to focus on Pfizer’s letter is because it’s head and shoulders above other letters I’ve read over the past week - a true Outlier.
Here is Dr. Bourla:
While I don’t have a strong view about whether Burla is an outstanding CEO (I have not done enough work yet), there are several signs pointing this might be the case:
A friend from Twitter mentioned Burla as potentially a great CEO;
Independently from my friend’s recommendation, I’ve stumbled upon the latest Pfizer’s letter and found it exciting (you can find the link to the letter at the end of this post);
Upon further digging, I’ve found that in 2020 Burla was ranked as America’s top CEO in the pharmaceutical industry by Institutional Investor.
Now to the letter. Burla starts with strong phrases: “bold decisions, even bolder actions”; “more focused than ever on delivering first-in-class science” etc. which immediately captures reader’s attention.
2020 was a year like none other in Pfizer’s history – defined by bold decisions, even bolder actions and incredible results. With the separation of Upjohn, we created a company that was 20% smaller but more focused than ever on delivering first-in-class science for the benefit of patients.
Then Burla tells Pfizer is doing much broader work than just development of COVID-19 vaccines:
To the outside world, it may have appeared that COVID-19 was the only thing we were working on in 2020, but that could not be further from the truth. While we invested significant time, resources and brainpower to find medical solutions to the pandemic, tens of thousands of Pfizer colleagues continued to advance equally important work across all of our therapeutic areas – recognizing that the needs of those suffering from other diseases were no less urgent.
And finally, probably the strongest and the most important part of the letter: Burla sets the new narrative for Pfizer – it’s The New Pfizer, “a smaller, science-driven, innovative biopharma company”.
The New Pfizer
With the completion of the Upjohn-Mylan transaction, we saw the culmination of a bold, decade-long transformation of Pfizer from a large, diversified enterprise to a smaller, science-driven, innovative biopharma company. The new Pfizer is all about two things: science and patients. By uniting transformational technology and cutting edge science, we are pioneering biopharmaceutical innovations to do more than just treat difficult diseases – we want to cure and prevent them. Our pipeline currently includes 95 potential new therapies or indications. That’s 95 potential opportunities to change the lives of patients around the world.
Bourla on improvements in R&D productivity:
R&D Productivity: We have driven incredible improvements in our clinical success rates. For example, our Phase 2 success rate on a five-year rolling average more than tripled from 15% five years ago to 52% as of year-end 2020 – which is almost double the 2019 industry benchmark of 29%. Significantly, most of these successes are either first-in-class assets or innovations built on established mechanisms with novel scientific designs. In addition, our end-to-end success rate more than quadrupled over the same time frame from 5% to 21% – almost triple the 2019 industry benchmark of 8%. We believe these metrics demonstrate that through our science, we are selecting assets to move through the R&D process that have the best chance of benefiting patients.
Bourla on the future:
Looking ahead, we remain focused on being nimble and investing in our R&D organization, so we can build on the strong improvement in key metrics we’ve seen over the past five years. We continue to expect a revenue CAGR of at least 6%, on a risk-adjusted basis, through the end of 2025, as well as double-digit growth on the bottom line. We remain very confident in our ability to achieve these growth rates because of the strength of both our current product portfolio and our R&D pipeline. At the same time, we will continue to pursue business development opportunities with the potential to enhance our long-term (post-2025) growth prospects.
Interesting detail: the letter mentions the word “science” 10 times.
And this is what Wikipedia article says about Dr. Bourla:
Albert Bourla (Greek: Άλμπερτ Μπουρλά, born October 21, 1961) is a Greek veterinarian and the chairman and chief executive officer of Pfizer, an American pharmaceutical company. He joined the company in 1993 and has held several executive roles across Pfizer's divisions. Prior to becoming chief executive officer, Bourla served as chief operating officer.
Bourla was motivated by an early love for animals and medicine and is credited with reshaping Pfizer to be a company focused on research and development and branded patent-protected prescription drugs…
In 2020, Bourla pushed Pfizer employees for the fast development of a COVID-19 vaccine in partnership with German company BioNTech, while making sure it is safe and effective. He told his team that "financial returns should not drive any decisions" with regards to the vaccine. He took the risk of producing the Pfizer–BioNTech COVID-19 vaccine before approval from the Food and Drug Administration so that it would be ready to ship immediately upon approval.
In 2020, he was ranked as America’s top CEO in the pharmaceutical industry by Institutional Investor.
While I’m not a pharma investor I have to admit that what Dr. Burla is doing at Pfizer seems to deserve special attention. He is 59 and probably has another 5-7 years ahead of him as a company CEO. So if you’re not shy of pharma and consider yourself a long-term investor, Pfizer might be worth taking a closer look.
https://annualreview.pfizer.com/files/Pfizer-Annual-Review-2020_Interactive-PDF.pdf